Paul is in the process of performing procedures to obtain the necessary understanding of the client's internal controls.As part of this process,Paul received from the client completed narratives,flowcharts,and internal control questionnaires.Paul can use this information from the client
A)if the entity-level controls and tone at the top were found to be effective.
B)if there has not been any significant change in the internal controls since the prior year.
C)as long as any subsequent reliance on controls is adequately substantiated with testing.
D)since it was prepared by management,which is unbiased.

Question

Quizplus · Accepted Answer

Even if the client's completed narratives, flowcharts, and internal control questionnaires were deemed effective in the prior year or were prepared by unbiased management, Paul cannot rely on this information without adequate testing. Further, if there have been significant changes in the internal controls since the prior year, Paul should perform additional procedures to assess the effectiveness of the controls. Therefore, the only correct choice is option C, which states that Paul can use the client's information as long as he performs adequate testing to substantiate subsequent reliance on the controls.

Paul Is in the Process of Performing Procedures to Obtain